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Everywhere you turn these days, someone is trying to sell you something. You probably receive a ton of email claiming that you can make thousands of dollars stuffing envelopes, or that you can put one tiny ad in the paper and become a millionaire.
Many of these "investment systems" claim to be able to make you millions of dollars over and over again automatically. My only question is, if there really were a system that could make you millions automatically, then why would anyone waste their time trying to sell you this "system" for a few hundred dollars when they could make better use of their time making millions automaticallY? The reason is because "investment systems" are a bunch bologna.
Although investment systems can't make you millions automatically, investors have found that over the years, there are a few strategies that do seem to work pretty well. One of these strategies is The Dogs of the Dow.
This is one of the easiest and least time consuming strategies you can find, and over the last 25 years, it has outperformed the market as a whole. It's perfect for the investor who wants to take all the guesswork out of investing and at the same time, spend as little amount of time as possible. This strategy, in fact, should only take about 15 minutes of your time once per year.
Sounds great, you ask, but how do I start? It's quite simple. The first thing you need to do is familiarize yourself with the Dow Jones and the stocks that make up the Dow 30.
The Dogs of the Dow Strategy simply says to take the 10 highest dividend yielding Dow Stocks and to invest evenly in each of them. For example, if you had $1,000, you would invest $100 in each of the 10 stocks. The strategy says to do this once a year, at the beginning of the year, but if you want, you could start this at anytime.
Once you start this strategy, it only takes about 15 minutes per year to maintain it. All you have to do is check the 10 highest dividend yielding stocks at the beginning of the year. You will usually have one or two stocks that fall out of the top ten, and all you have to do is replace them with the new ones. Try to even out the money allocated to each stock, but then again, you don't have to balance it out to the dime.
So what kind of return does this type of strategy bring? Typically, it has outperformed the Dow Jones by a few percentage points every year over the long term. Some years, it will under perform, and some years, it will over perform, but it averages out to about 3-4% higher than the Dow Jones annually.
That can make a big difference over the long term, but if you want to learn how to increase the performance even more by tweaking the strategy a bit, you'll want to visit our friends at the Motley Fool and learn about their famous Foolish Four strategy.
This strategy can add a few more percentages to the Dogs of the Dow strategy and is a great way to beat the Dow consistently, unlike those "investment systems" you keep hearing about.
Just as there are people trying to swindle you into "stuffing envelopes", there are also folks out there who try to fool you into buying an "investment system".
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